Were assembled crab traps and their parts exempt when sold to commercial fishermen in Florida?

Subject

Crab Traps

Plain-English summary

Assembled crab traps and their parts were generally subject to Florida sales tax when sold to commercial fishermen. The specific exemption for nets used exclusively by commercial fisheries did not extend to complete traps or materials used to construct traps.

A sale could instead qualify as a resale if the purchaser gave the seller a properly executed resale certificate. Qualifying items appropriate and necessary for a commercial fishing vessel could also receive the vessel-related interstate or foreign-commerce treatment when the purchaser supplied the required affidavit and met the registration, mileage, and record conditions.

What this means for you

Commercial fishing use did not create a blanket exemption. The exact product and the purchaser's documented resale or vessel-proration status controlled.

Common questions

Q: Did the fishing-net exemption cover crab traps? No.

Q: Could traps bought for resale be exempt? Yes, with a proper resale certificate.

Q: Could vessel-use rules reduce the tax? Potentially, when the item and fisherman met the ruling's interstate or foreign-commerce affidavit and record requirements.

Citations and references

• Fla. Stat. §§ 212.05(1)(a)1.a. and 212.08(5)(a), (8)(a), (b), (13) — retail sales and fishing-related exemptions
• Fla. Admin. Code rr. 12A-1.001(6), 12A-1.038(1), and 12A-1.064(5) — fisheries, resale, and vessel proration
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93A-034

Original ruling text

Jun 15, 1993

RE: TAA 93A-034
Sale of Crab Traps, Parts and Accessories to Commercial
Fishermen
Sections 212.05(1)(a)1.a., 212.08(5)(a),(8)(a),(b) and
(13), 212.21(2), F.S.
Rules 12A-1.001(6)(a)(b) and (d), 12A-1.038(1),
12A-1.064(5)(a)(b)1.2.(c) and (f), F.A.C.

Dear :

This is in response to your letter of March 25, 1993, in
which you requested the issuance of a technical assistance
advisement regarding your sale of crab traps, parts and
accessories to commercial fishermen to catch seafood such as
blue crabs, stone crabs, eels, catfish, crayfish and other
species of fish.

Your letter provides in part:

"In the operation of my business, I sell certain products
to commercial fishermen for the purpose of catching and selling
seafood. These products are: hex-shaped wire (salt water
netting, vinyl coated wire netting, other shapes and sizes of
wire and various allied products (i.e. hooks, bungee, rubber
tubing, fastening devices, plastic rings, rope, floats, etc.)
necessary for assembly into a finished unit for the purpose of
catching and selling seafood. We also sell these units
completely assembled and ready for use.

"Although I have always collected and reported state sales
taxes on these products, I get considerable customer resistance
to paying the tax. My commercial customers believe they should
be exempt due to the nature of their business. Many of them
have also told me of buying products from my competitors without
paying the tax. As you can see, this puts my company at a
distinct competitive disadvantage.

"Needless to say, I cannot exempt my customers without a
definitive answer, in writing, from the Department of Revenue."

Applicable Authority

Section 212.05(1)(a)1.a., F.S., provides in part:

"212.05 Sales, storage, use tax.--It is hereby declared to
be the legislative intent that every person is exercising a
taxable privilege who engages in the business of selling
tangible personal property in this state....
"(1) For the exercise of such privilege, a tax is levied on
each taxable transaction or incident, which tax is due and
payable as follows:
"(a)1.a. At the rate of 6 percent of the sales price of
each item or article of tangible personal property when
sold at retail in this state, computed on each taxable sale
for the purpose of remitting the amount of tax due the
state, and including each and every retail sale...."

Section 212.21(2), F.S., provides in part:

"(2) It is hereby declared to be the specific legislative
intent to tax each and every sale, admission, use, storage,
consumption, or rental levied and set forth in this
chapter, except as to such sale, admission, use, storage,
consumption, or rental as shall be specifically exempted
therefrom by this chapter subject to the conditions
appertaining to such exemption."

Section 212.08(13), F.S., provides in part:

"(13) No transactions shall be exempt from the tax imposed
by this chapter except those expressly exempted herein."

Rule 12A-1.038(1), F.A.C., provides:

"(1) It is the specific legislative intent that each and
every sale, admission, use, storage, consumption or rental
is taxable under Chapter 212, F.S., unless such sale,

admission, use, storage, consumption or rental is
specifically exempt. The exempt status of the transaction
must be established by the dealer. Unless the dealer shall
have taken from the purchaser a certificate to the effect
that the property or service was purchased for resale and
bearing the name and address of the purchaser, the
effective date of the certificate and the number of his
dealer's certificate of registration, or a certificate
bearing the number of his consumer's exemption certificate,
and the effective date of the certificate, the sale shall
be deemed to be a taxable sale at retail, except sales of
alcoholic beverages by distributors, licensed by the
Division of Alcoholic Beverage and Tobacco, Department of
Business Regulation."

Section 212.08(5)(a), F.S., provides:

"(5) EXEMPTIONS; ACCOUNT OF USE."(a) Items in agriculture use and certain nets.- There are
exempt from the tax imposed by this chapter nets designed
and used exclusively by commercial fisheries; fertilizers;
insecticides; herbicides; and fungicides used for
application on crops or groves; portable containers used
for processing farm products; field and garden seeds;
nursery stock, seedlings, cuttings, or other propagative
material purchased for growing stock; cloth, plastic, and
other similar materials used for shade, mulch, or
protection from frost or insects on a farm; and liquefied
petroleum gas or other fuel used to heat a structure in
which started pullets or broilers are raised; however, such
exemption shall not be allowed unless the purchaser or
lessee signs a certificate stating that the item to be
exempted is for the exclusive use designated herein."

Rule 12A-1.001(6)(a) and (b), F.A.C., provides:

"(6) FISHERIES
"(a) Nets and materials, parts and labor used in the repair
thereof, are exempt when used exclusively by commercial
fishermen. (Sponge fishermen qualify as commercial
fishermen.) To purchase such nets tax exempt, a

certificate in substantial conformity with the certificate
suggested in Rule 12A-1.039 must be executed.
"(b) The sale of fuels, vessels, and equipment, including
but not limited to, materials, parts and labor used in the
repair and maintenance of such ships and equipment, are
taxable to the extent provided in Section 212.08(4) and
(8), F.S. Items such as cleaning materials, lubricating
oils and greases, ice, fish bait, foul weather gear,
gloves, boots, rain clothing, rope, fishing tackle, and
logs are taxable to the extent provided in Rule 12A-1.064,
F.A.C., when purchased by commercial fisheries and
commercial fishermen to fulfill the purpose for which the
vessel is designed. Bait purchased by commercial fishermen
which is used solely for the entrapment of stone crabs and
blue crabs is specifically exempt."

Rule 12A-1.001(6)(d), F.A.C., provides:

"(d) Lumber, rope and plastic floats used in the
construction of crawfish traps are taxable."

Section 212.08(8)(a) and (b), F.S., provides:

"(a) The sale or use of vessels and parts thereof used to
transport persons or property in interstate or foreign
commerce is subject to the taxes imposed in this chapter
only to the extent provided herein. The basis of the tax
shall be the ratio of intrastate mileage to interstate or
foreign mileage traveled by the carriers vessels which were
used in interstate or foreign commerce and which had at
least some Florida mileage during the previous fiscal year.
The ratio would be determined at the close of the carriers
fiscal year. This ratio shall be applied each month to the
total Florida purchases of such vessels and parts thereof
which are used in Florida to establish that portion of the
total used and consumed in intrastate movement and subject
to the tax at the applicable rate. Items, appropriate to
carry out the purposes for which a vessel is designed or
equipped and used, purchased by the owner, operator, or
agent of a vessel for use on board such vessel shall be
deemed to be parts of the vessel upon which the same are

used or consumed. Vessels and parts thereof used to
transport persons or property in interstate and foreign
commerce are hereby determined to be susceptible to a
distinct and separate classification for taxation under the
provisions of this part. Vessels and parts thereof used
exclusively in intrastate commerce do not qualify for the
proration of tax.
"(b) The partial exemption provided for in this section
shall not be allowed unless the purchaser signs an
affidavit stating that the item or items to be partially
exempted are for the exclusive use designated herein and
setting forth the extent of such partial exemption. Any
person furnishing a false affidavit to such effect for the
purpose of evading payment of any tax imposed under this
part is subject to the penalties set forth in s. 212.12 and
as otherwise provided by law."

Rule 12A-1.064(5)(a),(b) 1., 2., (c) and (f), provides in
part:

"(5) Vessels
"(a) The sale and use of vessels and parts thereof used to
transport persons or property in interstate or foreign
commerce are subject to proration of the tax imposed by
Part I, Chapter 212, F.S., only to the extent provided
herein. The basis of the tax shall be the ratio of
intrastate mileage to interstate or foreign mileage
traveled by the carrier's vessels which were used in
interstate or foreign commerce and which had at least some
Florida mileage during the previous fiscal year. Such ratio
shall be applied each month to the total Florida purchases
of such vessels and parts thereof which are used in Florida
to establish that portion of the tax under Part I, Chapter
212, F.S. Vessels and parts thereof used exclusively in
intrastate commerce do not qualify for proration of tax.
Items purchased which are appropriate and necessary to
perform the purposes for which a vessel is designed or
equipped and used on board will be subject to the proration
herein when purchased by the owner, operator, or agent of
such vessel.
"(b)1. Prior to claiming the partial exemption, persons

operating vessels which transport persons or property in
intrastate commerce and interstate commerce or foreign
commerce who make any purchases hereunder must register as
dealers with the Department and extend in writing at the
time of purchase a resale certificate in lieu of tax,
stating the specific reasons for exemption. Vessels which
operate on the canals or inland waterways of Florida are
deemed to be engaged in intrastate commerce. However,
mileage of such vessels from the territorial limit to port
dockside and return into international waters, foreign or
coastwise, in the continuous movement of persons or
property in interstate or foreign commerce, is not
considered to be mileage in Florida.
"2. In addition, the partial exemption of vessels and parts
thereof used to transport persons or property in interstate
or foreign commerce, shall not be allowed unless the
purchaser signs an affidavit stating that the item or items
to be partially exempt are for the exclusive use designated
herein, not used for please purposes, and setting forth the
extent of such partial exemption. In the case of shrimping
or fishing vessels, the partial exemption shall not be
allowed unless the operator of the vessel maintains a daily
log and other records to indicate where the shrimping and
/or fishing occurred.
"(c) Persons operating vessels which transport persons or
property exclusively in interstate or foreign commerce may,
in lieu of registering as a dealer, furnish vendors with a
signed statement that they do not operate on or in the
canals or inland waterways of Florida. Mileage of vessels
from the territorial limit to port dockside and return into
international waters is not considered to be mileage in
Florida.
"(f) Commercial fishing vessels which are designed,
constructed, and used in a regular and recurring course of
business to catch seafood or in the taking or gathering of
sponges for the predominant commercial purpose of selling
such seafood or sponges at wholesale or retail qualify for
proration of tax to the extent provided in paragraph (a)."

Department Response

As indicated in the above quoted sections of Chapter 212,
F.S., and rules of the Florida Administrative Code, sales of
tangible personal are taxable unless specifically exempt.

The construction of the sales and use tax law is to tax
specific sales and to provide specific exemptions from of those
otherwise taxable transactions. In order for a taxpayer to
claim an exemption, he must clearly show that he is entitled to
the exemption.

Exemptions must be strictly and narrowly construed against
the person claiming an exemption. See Asphalt Pavers, Inc, v.
Department of Revenue, 584 So.2d 55 (Fla. 1st DCA 1991).
Doubtful language in a taxing statute should be resolved against
the existence of that exemption. See Department of Revenue v.
Skop, 383 So.2d 678, (1980).

Presently there is no specific exemption for the sale of
completely assembled crab traps and various parts to commercial
fishermen for their use in catching seafood.

Although Rule 12A-1.001(6)(a), F.A.C., provides an
exemption from tax for nets when used exclusively by commercial
fishermen, paragraph (d), states that lumber, rope and plastic
floats used in the construction of crawfish traps are subject to
tax. The rule makes a definite distinction between the exempt
status of fishing nets used by commercial fishermen and the
taxable status of materials to construct crawfish traps.

However, section 212.08(8)(a) and (b), F.S., provides a
partial exemption from tax for vessels engaged in interstate and
foreign commerce by way of a proration of tax based on the ratio
of intrastate mileage to interstate or foreign mileage when the
purchaser signs an affidavit stating that the item or items
purchased are partially exempt for the reason stated in the
affidavit.

Rule 12A-1.064(5), F.A.C., expands on this partial
exemption with paragraph (f), stating that commercial fishing
vessels used in the regular and recurring course of business to
catch seafood for the predominant commercial purpose of selling

such seafood qualify for the proration of tax as provided in
paragraph (a), when the vessels operate in interstate or foreign
waters and have at least some Florida mileage. The rule goes on
to explain that the commercial fishermen must register with the
department as a dealer prior to claiming the exemption with
paragraph (e), providing an example of an affidavit to be used
by the commercial fishermen when making purchases and reporting
tax on a proration basis.

Please note in paragraph (c) that vessels which operate
exclusively in interstate or foreign commerce may in lieu of
registering as a dealer, may present a signed affidavit to the
selling dealer to the effect that they do not operate on or in
the canals or inland waterways of Florida. Such affidavit will
relieve the selling dealer of the responsibility of collecting
tax on the sale of the items in question.

In summary, your sale of completely assembled crab traps
and the various parts to commercial fishermen is subject to tax
unless sold for resale and the purchaser extends a properly
executed resale certificate to you at the time of sale, or he
furnishes you a signed affidavit for purchase of items
appropriate to carry out the purpose for which the vessel was
designed, equipped and used.

This response constitutes a Technical Assistance Advisement
under s. 213.22, F.S., which is binding on the department only
under the facts and circumstances described in the request for
this advice as specified in s. 213.22, F.S. Our response is
predicated on those facts and the specific situation summarized
above. You are advised that subsequent statutory or
administrative rule changes or judicial interpretations of the
statutes or rules upon which this advice is based may subject
similar future transactions to a different treatment than
expressed in this response.

You are further advised that this response and your request
are public records under Chapter 119, F.S., which are subject to
disclosure to the public under the conditions of s. 213.22, F.S.
Your name, address, and any other details which might lead to
identification of the taxpayer must be deleted by the Department

before disclosure. In an effort to protect the confidentiality
of such information, we request you notify the undersigned in
writing within 15 days of any deletions you wish made to the
request or the response.

Sincerely,

Richard S. Harrod
Technical Assistant

RSH/pb
Enclosure
Con. #8110